The controversial use of control orders to limit the freedom of terrorist suspects without a trial has been dealt a serious legal blow after law lords ruled the use of secret evidence breached human rights legislation.

In a unanimous decision, a panel of nine law lords found in favour of three Libyan men, who argued that the Government's refusal to give any details of the evidence against them made a fair hearing impossible. The men have not been named for legal reasons.

While the control orders against the men have not been quashed, their cases will have to be heard again. But the Government now faces having to lift orders granted using secret evidence. Suspects can be banned from meeting certain people, stopped from using mobile phones or computers, or even forced to adhere to a strict 16-hour home curfew under the orders.

They were introduced in 2005 after the law lords ruled that the previous practice of locking up foreign terrorist suspects who had not been charged with an offence breached their human rights. There are 17 terrorist suspects who are currently subjected to control orders, six of whom are British citizens.

Lord Philips of Worth Matravers, the senior law lord, said: "A trial procedure can never be considered fair if a party to it is kept in ignorance of the case against him." Alan Johnson, the newly installed Home Secretary, called the ruling "extremely disappointing", adding that it would make it more difficult to protect the public from terrorism.

"All control orders will remain in force for the time being and we will continue to seek to uphold them in the courts. In the meantime, we will consider this judgment and our options carefully," he said.

The control orders have had a troubled existence since being introduced in 2005. An original power to impose an 18-hour home curfew on suspects was ruled to breach the Human Rights Act by the law lords in 2007. Human rights campaigners said yesterday's ruling was a major victory. Shami Chakrabarti, director of Liberty, called for an end to the orders. "I can think of no better way for the Prime Minister to make a fresh start for his Government than to abandon the cruel and counter-productive punishments without trial instituted by his predecessor," she said.

The ruling has also increased the pressure on the Government to allow the use of intercept evidence, including information obtained by monitoring phone calls and email accounts, in British courts.

"It is now a matter of extreme urgency that the British Government makes it possible to use intercept evidence in terrorism cases," said David Davis, the former shadow home secretary. "This will allow conventional British courts to lock up those people who are real terrorists on the basis of real evidence after a proper trial, rather than continue with a system that has failed both legally and practically."

Chris Huhne, the home affairs spokesman for the Liberal Democrats, also called for intercept evidence to be made permissible, calling the use of control orders a "fundamental infringement of human rights".

But Mr Johnson said: "We have put strong measures in place to try to ensure that our reliance on sensitive material does not prejudice the right of individuals subject to control orders to a fair trial."

How does a control order restrict a suspect's life?

Q. What are control orders, and what are they designed to do?

A. They allow the imposition of restrictions on any person suspected of involvement in any terrorism-related activity.

Q. How do the restrictions work, and what do they stop people doing?

A. House curfews for up to 16 hours a day; control of internet and telephone access; electronic tagging; bans on foreign travel; daily reporting to police; bans on associating with certain people.

Q. When were control orders brought in?

A. In March 2005 after a House of Lords ruling that holding terror suspects without charge or trial was in breach of their human rights. The Lords ruled against a provision of the Anti-terrorism, Crime and Security Act 2001 – introduced following 9/11 – which allowed foreign terror suspects to be detained indefinitely. Ministers had claimed that such detainees could not be prosecuted because a trial would put secret intelligence at risk, so control orders were introduced to restrict their movements.

Q. Do all control orders work in the same way?

A. No, there are two types. Non-derogating control orders do not require the Government to opt out of article five of the European Convention on Human Rights, which protects the right to liberty. These last for 12 months and can be renewed each year. Derogating orders infringe the right to liberty and require an opt-out. They have never been used.

Q. How many people are under control orders?

A. At least 35 people have been made the subject of non-derogating control orders.

Q. What do critics of the orders say about them?

A. Shami Chakrabarti, director of Liberty, says: "Control orders constitute permanent punishment without trial and one of the worst legacies of the 'war on terror'. The innocent can be placed under permanent house arrest on the basis of secret intelligence, possibly flowing from torture – the guilty may easily remove their plastic tags, disappear and do their worst."

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